South Africa gambling industry to grow $2.5 billion in 2021
The gambling industry in South Africa is set to grow at a compounded rate of more than 5% to reach nearly R35 billion ($2.5 billion) by 2021, according to a new report from PwC. Currently, the industry is valued at R27 billion, having grown from R26 billion in the last financial year.
Gambling has grown into a multi-billion Rand industry in South Africa ever since its legalisation in 1994. Twenty years later in 2014, the industry was worth more than R23 billion. Since, the Gross Gambling Revenues (GGR) in the country have risen another R4 billion to their current levels of R26.9 billion. The current state of the gambling industry and its components is highlighted in a new report from Big Four accounting and advisory firm PwC, titled ‘Gambling Outlook South Africa 2017-2021.’
The report reveals that the industry will surpass the R28 billion mark by the end of this financial year, growing at 4.5 %, which is almost a percentage increase from its growth figures last year. Till 2021, the industry will grow at a Compounded Annual Growth Rate (CAGR) of 5.3%, reaching a total value of R34.8 billion.
Among the components of the industry, some have had a more fortuitous time than others. For instance, Bingo has gained significant popularity in the country, having grown at a staggering 36.6% last year, by far the fastest growing segment. The growth is set to continue further, at a CAGR of 11.9% over the next four years, reaching a value of just over R2.2 billion.
Betting is also growing at a substantial rate, having increased by 14.3% last year, and projected to grow at a CAGR of 8.1% to hit a total value of R7.5 billion by 2021. Betting is a segment that performs particularly well, primarily due to the inclusion of legal sports betting and horse racing within its domain, both of which have been skyrocketing in recent years. Legal sports betting, which grew by 21% last year, has more than tripled its value since 2012, going from R847 million to R2.9 billion.
On the other hand, industry trends have not taken a lucrative turn for the casino gambling segment. The segment is the only one to register a drop in the last year, falling by 1.7% from R18.2 billion to R17.9 billion. This can be attributed to a number of factors, including overall economic conditions in the country that have squeezed spending power, as well as the emergence of a booming illegal gambling arena. However, the segment will recover from its current slump according to the report, projected to increase at 3.5% to R21.2 billion by 2021.
Other segments of the industry include Limited Payout Machines (LPM) and the National lottery, both of which are also due to increase. Currently at R2.7 billion, the LPM segment will grow at a relatively high CAGR of 7.5% to just short of R3.9 billion. Meanwhile, the National lottery segment, consistent with the past, is projected to record the lowest CAGR of 0.7% over the next few years, growing by R100 million from R3 billion to R3.1 billion.
Commenting on the findings of the report, Pietro Calicchio, Leader of the Hospitality and Gambling Industry for PwC in South Africa, said, “The gambling industry in South Africa will continue to be adversely affected in the near term by slower economic growth, but improving economic conditions over the latter part of the forecast period will aid growth. The industry remains an important contributor to the economy through the creation of jobs, continued capital expansion and the payment of taxes to both provincial and national government.”
In this regard, the gambling industry is currently much like the retail industry of South Africa, which is also showing promising signs of growth despite the economic slowdown that the whole country is experiencing. At any rate, optimism has returned to the South African economy, as most top executives are confident in the country’s future, and are temping up their plans for investment.
